Robert Summers and Alan Heston published data for 130 countries that used purchasing power parity, rather than market exchange rates, to compare GDP across countries. As a result, measured per capita incomes of developing countries rose relative to per capita incomes in developed countries. This is most likely because:
A. nonmarket activity is less extensive in developing countries than in developed countries.
B. prices of standard goods in developing countries are generally higher than those in developed countries.
C. nonmarket activity is more extensive in developing countries than in developed countries.
D. prices of standard goods in developing countries are generally lower than those in developed countries.
Answer: D
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When cash is withdrawn from a checkable-deposit account at a bank, the
A. composition of money supply M1 does not change. B. money supply M1 increases. C. money supply M1 does not change but its composition changes. D. money supply M1 decreases.
Joe's increase in wages has been identical to the increase in the price level. Joe thinks that he is better off and has increased his expenditures. Joe's behavior is consistent with
A) the classical model. B) Say's law. C) money illusion. D) a vertical aggregate supply curve.
Monique buys a new television for $795. She receives consumer surplus of $355 from the purchase. How much does Monique value her television?
A) $355 B) $440 C) $795 D) $1150
The labor input in the production function can increase
A) only if the number of workers increases. B) only if the efficiency of the existing workers improves. C) if the number of workers increases and/or the efficiency of the existing workers improves. D) only if both the number of workers increases and the efficiency of the existing workers improves.